Unemployment in the Irish economy fell to another two-decade low of 4.3 per cent in February despite the inflationary headwinds.
This was down from 4.6 per cent in February last year and suggests conditions in the labour market remain tight. Central Statistics Office (CSO) data published on Wednesday indicated there were 116,500 people classified as unemployed last month compared with 118,100 in January.
The CSO said there was a decrease of 5,700 in the seasonally adjusted number of unemployed people in February when compared with a year earlier.
[ Inflation unexpectedly rises to 8% in FebruaryOpens in new window ]
The headline figure comes on the back of recent data from the CSO’s Labour Force Survey, indicating that employment grew by 68,600 last year despite a severe cost-of-living crisis and a slowdown in international activity.
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That meant the total number of people employed in the Irish economy rose to a record 2.57 million.
“The unemployment numbers provide yet more encouragement that the economy is weathering the challenges presented by inflation and doesn’t appear impacted by the tech jobs slowdown,” Andrew Webb, chief economist at Grant Thornton Ireland, said.
“The number of unemployed people is now down to 116,500. Could this positive run continue to bring the number below 100,000, a figure last achieved in 2005? Economic headwinds suggest not, but I wouldn’t bet against it,” he said.
While consumer spending and investment have slowed in the face of inflationary pressures, the Irish labour market remains resilient. An unemployment rate of 4 per cent here is considered to equate to full employment.
The stronger-than-expected employment and growth figures emanating from Ireland helped the euro zone as a whole avoid recession. They will also strengthen the resolve of European Central Bank policymakers to continue pushing up interest rates. The fear previously was that a series of rate hikes would trigger a recession but that has dissipated.
ECB policymakers also fear tight labour markets across Europe will lead to wage rises, potentially feeding inflationary pressures.
Wages in the Irish economy rose at a rate of 4 per cent last year but there are big disparities between sectors and compositional factors that make tracking wage trends in Ireland difficult.
Jack Kennedy from global recruitment website Indeed also highlighted the falling rate of unemployment, noting the February numbers continued “the trend of sustained reduction in joblessness over the past year”.
“It comes amid optimistic, albeit still cautious, forecasts for the Irish economy based on falling energy prices, resilient global demand and easing inflationary momentum,” he said.
